Question

Q1. B.. Sikadanka, the Chairman and CEO of Defenders Ltd recently confronted the Chief Accountant of the

company over the way and manner the financial statements were presented for the 2017 financial year. The
following points are summaries of the CEO's reservations about the financial statements:
A.
He argued that the values of the company's assets be shown at current market values since these
values will provide a better view of the company's value. The Chief Accountant is still insisting that
the assets should be stated at original cost.
B.
C.
D.
E.
He expressed shock when the financial statements did not show a value for the company's efficient
staff. He argued that the company's beautiful and handsome sales personnel are valuable assets
used to attract customers and therefore insisted that this "power of attraction" should be recognized
in the books of accounts and reflected on the face of the financial statement.
He was worried when a potential sale of millions of Ghana cedis to a certain buyer from whom
purchase orders have been received have not been recognized in the books of accounts as sales.
The Chief Accountant argued that these potential customers have only been sent pro-forma
invoices and so are not obliged to pay the company.
The CEO recently bought a saloon car for his son out of company funds. The Chief Accountant
recorded this on a current account for the CEO. This resulted in an intense argument. The CEO
threatened to dismiss the Chief Accountant should he refuse to recognize the purchase of the
saloon car as a transaction of the company.
The CEO insisted that the value of expired inventory should be maintained in the books of accounts
and not written off.
Required:
State which accounting concept should be applied in preparing the financial statements in order to report fairly
the business of Defenders Ltd?

Answer 1

Answer: a is the great answer

Step-by-step explanation: